Tax exemption for foreign airlines on the anvil

A panel of officials has recommended that the GST Council exempt foreign airlines from paying taxes on certain services imported from their overseas branches or related entities, when no payment is involved. This recommendation comes after extensive discussions by the fitment committee and could provide significant relief to foreign airlines that have received tax notices from the Directorate General of GST Intelligence (DGGI). The Ministry of Civil Aviation was also consulted on this matter. Accordingly, the panel decided that the exemption would apply to services imported by a foreign airline’s establishment in India from related entities abroad, provided that the airline has already paid the applicable GST on the transportation of goods and passengers within India. Finnair, KLM Royal Dutch Airlines, Qatar Airways, Virgin Atlantic, Etihad, Emirates, etc. have been issued GST notices for non-payment of taxes on these imported services, as per a report.